In an interview with ProMarket, Harvard economist Dani Rodrik explained where globalization went wrong, how trade agreements serve rent-seeking by politically well-connected firms, and why the only solution to the rise of political populism is an economic populism that reimagines the institutions of capitalism.

NBER Working Paper No. 24344Issued in February 2018NBER Program(s):International Trade and Investment, Political Economy As trade agreements have evolved and gone beyond import tariffs and quotas into regulatory rules and harmonization, they have become more difficult to fit into received economic theory. Nevertheless, most economists continue to regard trade agreements such as the Trans Pacific Partnership (TPP) favorably. The default view seems to be that these arrangements get us closer to free trade by reducing transaction costs associated with regulatory differences or explicit protectionism. An alternative perspective is that trade agreements are the result of rent-seeking, self-interested behavior on the part of politically well-connected firms – international banks, pharmaceutical companies, multinational firms. They may result in freer, mutually beneficial trade, through exchange of market access. But they are as likely to produce purely redistributive outcomes under the guise of “freer trade.”

A half century ago America’s largest private-sector employer was General Motors, whose full-time workers earned an average hourly wage of around $50, in today’s dollars, including health and pension benefits.

Today, America’s largest employer is Walmart, whose average employee earns $8.81 an hour. A third of Walmart’s employees work less than 28 hours per week and don’t qualify for benefits.

There are many reasons for the difference – including globalization and technological changes that have shrunk employment in American manufacturing while enlarging it in sectors involving personal services, such as retail.

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Consumer spending is 70 percent of economic activity, but consumers are also workers. And as income and wealth continue to concentrate at the top, and the median wage continues to drop – it’s now 8 percent lower than it was in 2000

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Robert B. Reich is Chancellor's Professor of Public Policy at the University of California at Berkeley and Senior Fellow at the Blum Center for Developing Economies. He served as Secretary of Labor in the Clinton administration, for which Time Magazine named him one of the ten most effective cabinet secretaries of the twentieth century. He has written fifteen books, including the best sellers "Aftershock", "The Work of Nations," and"Beyond Outrage," and, his most recent, "Saving Capitalism."

What is this guys solution?

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But if retail workers got a raise

This is just another reason why Trump got in, the mainstream politicians are yapping about increasing mcdonalds workers pay to boost the economy while claming trade deficits are ok.

The Republicans won't do anything about it; it was a Republican administration that oversaw the collapse of manufacturing in the US. Will the Democrats? Probably not, they're too up the liberal/fascist IT state's arse (socially liberal, organisationally fascist).

Globalisation has been a bad thing for most of us; at the same time being in a large trade block is our only/best protection. Go figure...

_________________"It is impossible to design a system so perfect that no one needs to be good."

Yeah, fair enough; but by 'us', I mean not 'them' It's a point I've made myself in terms of "things are getting worse"; actually they're getting better overall. Still, for a lot of the old industrial nations, manufacturing as they used to know it is gone and not coming back. It quite depressing to read that the Brexiters think they're going to compete in manufacturing with Asia; it just isn't going to happen.

That it is a good thing overall doesn't detract from the fact that it is bad for specific groups close to us; particularly those in countries with low general education attainment like the US and the UK. The move to paying for third-level education is particularly bad for the long-term, I reckon.

_________________"It is impossible to design a system so perfect that no one needs to be good."

That it is a good thing overall doesn't detract from the fact that it is bad for specific groups close to us; particularly those in countries with low general education attainment like the US and the UK. The move to paying for third-level education is particularly bad for the long-term, I reckon.

I can't help but feel that the UK/USA treating education as an entitlement rather than a societal necessity has backfired spectacularly with Trump and Brexit. I had to grimace last week when at a dinner party in England a guest said she'd pass on an opportunity to work in Spain for a period as it may "dilute/taint her superior British education".

In their bubble many still think they're it and in no way are their current social funding cutbacks anything to with lost competitivity. This perception of superiority is only amplified by high fees, which are seen as a justified premium on a "superior British education!".

Meanwhile the standard of domestic entrants to third level continues to fall as fewer are willing to take on the bigger student debt. The UK and USA remain increasingly dependent on the produce of other nations state funded education systems.

_________________Every single frozen corpse in the Death Zone on Everest was once a highly motivated person.

Those who don't study history are doomed to repeat it. Those who do study history are doomed to watch everyone else repeating it.

Why couldn`t it have happened anyway? Europe rebuilt after WW2, why hasn't the third world ever gotten up off its ass?

No Marshall plan. The need to build support in Europe and Japan as a buffer against the USSR helped the US have an interest in ensuring Europe and Japan regained their standard of living. Europe already knew how to industrialise and not everything was destroyed in WW2.A lot of Countries only decolonized after WW2 and most had no native industries as the Colonizer used them as a source of cheap raw materials and a market for their finished products.Unfair trade balance between developed and developing.Access to capital.

_________________No tool is omnicompetent. There is no such thing as a master-key that will unlock all doors.--Arnold Toynbee

If you want to improve, be content to be thought foolish and stupid.--Epictetus

Why couldn`t it have happened anyway? Europe rebuilt after WW2, why hasn't the third world ever gotten up off its ass?

No Marshall plan. The need to build support in Europe and Japan as a buffer against the USSR helped the US have an interest in ensuring Europe and Japan regained their standard of living. Europe already knew how to industrialise and not everything was destroyed in WW2.A lot of Countries only decolonized after WW2 and most had no native industries as the Colonizer used them as a source of cheap raw materials and a market for their finished products.Unfair trade balance between developed and developing.Access to capital.

A far higher level of corruption and lack of democracy would play a part too

Donald Trump has built a reputation over his first 15 months in office as an impetuous leader prone to destabilising policy U-turns. But even for him his move this week to order top economic advisers to re-examine the case for joining the vast Trans-Pacific Partnership is particularly brazen.

If it results in the US rejoining the TPP with Japan and 10 other Pacific Rim economies, Thursday’s move to order Larry Kudlow, the new head of his National Economic Council, and US trade representative Robert Lighthizer to study the case for doing so will have launched the biggest economic policy shift of Mr Trump’s presidency.

From the FT.

China is filling the vacuum left by Trump in the pacific region.

_________________Every single frozen corpse in the Death Zone on Everest was once a highly motivated person.

Those who don't study history are doomed to repeat it. Those who do study history are doomed to watch everyone else repeating it.

The Republicans won't do anything about it; it was a Republican administration that oversaw the collapse of manufacturing in the US. Will the Democrats? Probably not, they're too up the liberal/fascist IT state's arse (socially liberal, organisationally fascist).

Manufacturing in the USA has not collapse, most manufacturing jobs were lost to automation and people moving onto better quality work

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[The Myth of U.S. Manufacturing Decline

“We are not making stuff anymore in America,” is the word on the street. “Our industrial base is eroding,” say the academics. In short the decline of domestic U.S. manufacturing is conventional wisdom. The problem is that it is not true – not even close. And this falsehood has important consequences....Then jobs took a dive even as manufacturing continued to increase right up until the economic crisis of 2008. These data cannot be explained by offshoring. There is only one explanation – automation.

Globalisation has been a bad thing for most of us; at the same time being in a large trade block is our only/best protection. Go figure...

How has Globalisation been a bad thing? Globalisation has been with us since we were put on this good green Earth.

_________________"Abortion is the only event that modern liberals think too violent and obscene to portray on TV. This is not because they are squeamish or prudish. It is because if people knew what Abortion really looked like, it would destroy their pretence that it is a civilized answer to the problem of what to do about unwanted babies." ~ Peter Hitchen

Last edited by Mossy_Heneberry on Sun Apr 15, 2018 12:50 am, edited 1 time in total.